chapter 4 patenting of micro-organisms and cells

Chapter 4

Patenting of Micro-Organismsand Cells

“The grant or denial of patents on micro-organisms is not likely to put an end to genetic researchor its attendant risks. The large amount of research that has already occurred when no researcherhad sure knowledge that patent protection would be available suggests that legislative or judicialfiat as to patentability will not deter the scientific mind from probing into the unknown any morethan Canute could command the tides. ”

Chief Justice Warren BurgerChakrabarty v.. Diamond

“Those companies in the private sector which are investing hundreds of millions of dollars in thisnew science do not accept the theory that patents are unimportant. Such a concept is particularlyrepugnant to patent-conscious, research-intensive pharmaceutical firms dealing in global marketswith drugs which require staggering investments of time and money before ultimately yielding acommercial return. To them the patent shelter is paramount. It is quite literally their sole incentivefor risk taking.”

William DuffeyPatent Lawyer, Monsanto

CONTENTSPage

INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51PROCESS PATENT PROTECTION PRIOR TO 1980. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51THE CHAKRABARTY CASE. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51POST-CHAKRABARTY EVENTS AND TRENDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54

Federal Patent Policy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54Patents and the Commercialization of Biotechnology.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55Patent Activity Following Chakrabarty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55Emerging Patent Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56U.S. Patent and Trademark Office Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60

SUMMARY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60CHAPTER 4 REFERENCES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

FiguresFigure Page4-1. The Structure of DNA.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 514-2. Recombinant DNA: The Technique of Recombining Genes From One Species

With Those From Another . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 524-3. Patent Activity Class 935, Genetic Engineering.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 634-4. Patent Activity Class 435, Chemistry: Molecular Biology and Microbiology . . . . . . . 64

TablesTable Page4-1. Class 935, Genetic Engineering. ........ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 614-2. Class 435, Chemistry: Molecular Biology and Microbiology . . . . . . . . . . . . . . . . . . . . . . 624-3. Patents: Applications and Ownership, by Class . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62

Chapter 4

Patenting of Micro-Organisms and Cells

INTRODUCTIONThe development of recombinant DNA technol-

ogy in the 1970s led to debate on many policyquestions, one of which concerned the patenting ofliving matter. The purpose of this chapter is todiscuss process patent protection available prior to1980, the Supreme Court’s landmark decision per-mitting the patenting of living matter (in this casebacteria), and several patent-related events andtrends that occurred or were identified subsequent tothe Supreme Court case.

PROCESS PATENT PROTECTIONPRIOR TO 1980

Patents on biotechnological developments datefrom the early days of the United States patentsystem. Louis Pasteur received a patent for a processof fermenting beer. Acetic acid fermentation andother food patents date from the early 1800s, whiletherapeutic patents in biotechnology were issued asearly as 1895. The first patent for isolating nucleicacid was issued in 1945, and the first patent forpreparing ribonucleic acid by a fermentation processwas issued in 1966. Until the recent advances inbiotechnology, such process patent applicationswere examined primarily by the U.S. Patent andTrademark Office’s (PTO) examining group infermentation chemistry (18). Since March 1988, aspecial biotechnology examining group handlesthese patent applications.

The development of recombinant DNA technology—the joining of DNA from different organisms—hasresulted in greatly increased understanding of thegenetic and molecular basis of life (see figure 4-l).Following the first successful directed insertion ofrecombinant DNA in a host micro-organism in 1973,scientific researchers began to recognize the poten-tial for directing the cellular machinery to developnew and improved products and processes in a widevariety of industrial sectors (see figure 4-2). Many ofthese products were micro-organisms (microscopicliving entities) or cells (the smallest component oflife capable of carrying on all essential life proc-

esses). With the development of rDNA technologyarose the issue of patenting the inventive results ofthe technology.

Prior to 1980, PTO would not grant patents forsuch inventions, deeming them to be “products ofnature” and not statutory subject matter as definedby 35 U.S.C. 101.1 Although patent applicationswere rejected if directed to living organisms per se,patent protection was granted for many composi-tions containing living things (e.g., sterility testdevices containing living microbial spores, foodyeast compositions, vaccines containing attenuatedbacteria, milky spore insecticides, and various dairyproducts) (18). In the absence of congressionalaction, it took a catalytic court decision to clarify theissue of patentability of living subject matter.

THE CHAKRABARTY CASEThe Supreme Court’s single foray into biotech-

nology occurred in 1980 with its ruling in the patentlaw case of Diamond v. Chakrabarty (4).

Figure 4-l-The Structure of DNA

SOURCE: Office of Technology Assessment, 1989.

Isec.tion )()/. /nventjom Patgnt&/e. whoever invents or discowrs any new and useful process, machine, manufacture, or composition of matter, orany new and useful Jmprwemern thereof, may obtain a patent thercfor, subject to t.k conditions and requirements of this title.

–5 1-

.

52 ● New Developments in Biotechnology: Patenting Life

Ananda Chakrabarty, a microbiologist at theGeneral Electric Research and Development Centerin Schenectady, New York, had developed a geneti-cally engineered (but not recombinant) bacteriumcapable of breaking down multiple components ofcrude oil. Because this property was not possessedby any naturally occurring bacteria, Chakrabarty’sbacterium was thought to have significant value forthe cleanup of oil spills.

Chakrabarty filed a patent application asserting36 claims relating to “a bacterium from the genusPseudomonas containing therein at least two stableenergy-generating plasmids, each of said plasmidsproviding a separate hydrocarbon degradative path-way.” The patent claims were of three types:

● process claims for the method of producing thebacteria;

. claims for an inoculum comprised of a carriermaterial floating on water (e.g., straw); and

. product claims for the bacteria.

The patent examiner allowed the claims for theprocess and for the inoculum but rejected the claimsfor the bacteria on two grounds: 1) micro-organismsare “products of nature” and 2) as living things,micro-organisms are not patentable subject matterunder 35 U.S.C. 101. Chakrabarty appealed therejection of these claims to the PTO Board ofAppeals. The Board reversed the examiner on thefirst ground, concluding that the new bacteria werenot products of nature, because Pseudomonas bacte-ria containing two or more different energy-generating plasmids are not naturally occurring. Thesecond ground of rejection—that the bacteria did notconstitute statutorily protectable subject matter—was affirmed.

Chakrabarty then appealed the PTO decision tothe Court of Customs and Patent Appeals, whichreversed the decision (3). Judge Rich, writing for themajority in the split decision, relied upon an earlierlower court decision which held that the fact thatmicro-organisms are alive is without legal signifi-cance for purposes of the patent law (9).2 The casewas then appealed to the U.S. Supreme Court by theGovernment. The Supreme Court, in a 5-4 ruling,held that a live, human-made micro-organism ispatentable subject matter under section 101 as a“manufacture>’ or “composition of matter.”

Figure 4-2-Recombinant DNA: The Technique ofRecombining Genes From One Species With Those

From Another

Restriction enzymes recognize sequences along the DNA andcan chemically cut the DNA at those sites. This makes it possibleto remove selected genes from donor DNA molecules to form therecombinant DNA. The recombinant molecule can then beinserted into a host organism and large amounts of the clonedgene, the protein that is coded for by the DNA, or both, can beproduced.

SOURCE: Office of Technology Assessment, 1989.

How did the Court reach its conclusion? Becausethe case involved statutory construction, i.e., themeaning of the language of the statute and the intentof the legislature in enacting the statute, the Courtconducted an analysis of the language and legisla-tive history of section 101. In so doing, the Courtreached the following conclusions:

. In looking at the plain meaning of the statu-tory language, words are to be interpreted astaking their ordinary, contemporary, commonmeaning. In addition, courts should not readinto the patent laws limitations and conditionswhich the legislature has not expressed (23).Therefore, the terms “manufacture” and “com-position of matter” must be interpreted inaccordance with their dictionary definitions.Because both terms are expansive in theirmeaning, and are modified in the statutorylanguage by the expansive term “any,” Con-gress plainly contemplated that the patent laws

2Allhough tie su~me Cow decided to hear both the Ber~ and Chakrabar@ cases, Bergy wiLhdrew his Ckim so only the C’hakra&W cw w=argued.

Chapter 4--Patenting of Micro-Organisms and Cells ● 53

1

BACKGROUND OF THE INVENTION

‘

1

SOURCE: U S Patant and Trademark Ofhca


would be given wide scope. Federal courtsshould not read into patent laws limitations andconditions which the legislature has not ex-pressed.

● The legislative history of the patent statutealso supports a broad construction. Congressoriginally adopted Jefferson’s view that “inge-nuity should receive a liberal encouragement.”Jefferson’s original subject matter statutorylanguage remained virtually intact through fiverewrites of the patent statute spanning 187years. Indeed, committee reports accompany-ing the most recent patent act revision “informus that Congress intended statutory subjectmatter to include anything under the sun madeby man.”

. Laws of nature, physical phenomena, andabstract ideas are not patentable. New min-erals discovered in the earth, a new plant foundin the wild, Einstein’s celebrated law of E=mc2,and Newton’s law of gravity were all cited bythe Court as “manifestations of. . . nature, freeto all men and reserved exclusively to none.”Unlike such manifestations, Chakrabarty’s micro-organism was a product of human ingenuityhaving a distinct name, character, and use.

. The passage of the 1930 Plant Patent Act(PPA) (affording patent protection for certainasexually reproduced plants) and the 1970Plant Variety Protection Act (PVPA) (pro-viding protection for certain sexually repro-duced plants) does not evidence congressionalunderstanding that the terms “manufacture” or“composition of matter” do not include livingthings.

● The fact that genetic technology was unfore-seen when Congress enacted Section 101 doesnot require the conclusion that micro-organisms cannot qualify as patentable subjectmatter until Congress expressly authorizessuch protection.

● Arguments against patentability based onpotential hazards that may be generated bygenetic research should be addressed to theCongress and the Executive for regulation orcontrol, not to the Judiciary.

The dissenting opinion opposed the patentabilityof living things and concluded that PPA and PVPAevidenced Congress* understanding, at least from

1930, that living things were not patentable subjectmatter. The dissenters reasoned that if living thingswere patentable, then “the plants included in thescope of the 1930 [PPA] and 1970 [PVPA] Actscould have been patented without new legislation.”Because Congress thought it had to legislate in orderto make agricultural “human-made inventions pat-entable” in 1930, and because bacteria were specifi-cally excluded from coverage in the PVPA, thedissenters reasoned that “Congress plainly legislatedin the belief that Section 101 does not encompassliving organisms.”

Although Chakrabarty held that a live, human-made micro-organism was patentable, the specificissue of whether plants and animals are patentablewas not addressed. The Chakrabarty decision did,however, provide the judicial framework for PTO tolater determine that plants and animals were patent-able subject matter under the U.S. Code (see chs. 5and 6). Many observers agree that the Chakrabartydecision provided great economic stimulus to pat-enting of micro-organisms and cells, which in turnprovided stimulus to the growth of the biotech-nology industry in the 1980s. One patent examinernotes, however, that even without Chakrabarty,some aspects of patenting of recombinant DNAtechnology probably would not have been adverselyaffected since plasmids, phage, and viruses are notliving and thus would have been ultimately em-braced as patentable subject matter (18).

POST-CHAKRABARTY EVENTSAND TRENDS

Federal Patent Policy

In addition to the Chakrabarty decision, revisionsin Federal patent policy encouraged increased pat-enting of living organisms and related processes.Prior to 1980, no single patent policy existed forgovernment-supported research, despite the FederalGovernment’s preeminence in biotechnology-related research funding. Instead, each Federalagency developed its own rules, resulting in 26different patent policies. Under this system, onlyabout 4 percent of some 30,000 government-ownedpatents were licensed. Furthermore, the governmentpolicy of granting nonexclusive licenses discour-aged private investment, since a company lacking anexclusive license was unlikely to pay the cost of

Chapter 4---Patenting of Micro-Organisms and Cells ● 55

developing, producing, and marketing a product.Thus, potentially valuable research remained unex-ploited.

To resolve this problem, Congress passed thePatent and Trademark Amendments of 1980 (PublicLaw 96-517) as amended in 1984 (Public Law98-260) to promote efforts to develop a uniformpatent policy that would encourage cooperativerelationships and to commercialize government-funded inventions. From 1980 through 1984 patentapplications by universities and hospitals for inven-tions containing human biological increased morethan 300 percent as compared to the previous 5-yearperiod (20).

The policies adopted by Congress in 1980 and1984, which gave statutory preference to smallbusinesses and nonprofit organizations, were ex-tended to larger businesses (with some exceptions)in 1983 (12). The Technology Transfer Act of 1986(Public Law 99-502) granted Federal authority toform consortia with private concerns. ExecutiveOrder 12591, issued in 1987, further encouragedtechnology transfer programs, including the transferof patent rights to government grantees. In combina-tion with the Chakrabarty decision, these actionshelped spur patent activity.

Patents and the Commercialization ofBiotechnology

The Chakrabarty decision helped to precipitateincreased research and development, assuring thecommercialization of biotechnology in the UnitedStates. The commercialization of biotechnology wasthe focus of an earlier report in OTA’s NewDevelopment in Biotechnology assessment series(21). In that report, OTA noted that patent protec-tion of biotechnology products is a major unre-solved issue that presents a potential barrier tocommercialization.

Patents are very important to commercial entities.For an emerging biotechnology company, patentscan help attract venture capital, collaborative ar-rangements, and new research and developmentleads. Investors watch biotechnology patent devel-opments and sometimes react quickly to news. Theinitial public offering of stock by Genentech in 1980set a Wall Street record for the fastest price per shareincrease ($35 to $89 in 20 minutes); the initial public

offering by Cetus in 1980 set a record for the largestamount of money raised in an initial public offering($1 15 million) (19). In September 1986, Genen-tech’s stock dropped 10.5 points following the newsthat Hoffmann-La Roche had sued it for infringinga patent for human growth hormone. Genentech’sstock rose the previous year when it sued Burroughs-Wellcome (PLC) in Great Britain for allegedlyinfringing a British patent on tissue plasminogenactivator (21 ).

By 1987, 403 American companies dedicated tobiotechnology and 70 established corporations withsignificant investments in biotechnology yielded anestimated 35,900 jobs, including 18,600 scientistsand engineers. Combined, U.S. industry is spending$1.5 billion to $2.0 billion annually in biotech-nology research and development. On average,dedicated biotechnology companies—those entre-preneurial ventures started specifically to commercial-ize innovations in biotechnology—have filed fewerbiotechnology patent applications than larger, diver-sified firms that use biotechniques—1.5 v. 10applications, respectively, in 1986. This is likely dueto a greater institutional capacity to file multiplepatents in the larger, more diversified companies(21).

Patent Activity Following Chakrabarty

Although Chakrabarty addressed the subjectmatter patentability of a human-made micro-organism, i.e., a patent on the end product, manypatent law developments involve the use of suchmicro-organisms and cells in processes that couldbe patented. Data compiled by PTO within the first3 years of the Chakrabarty decision focused on sixareas of U.S. patent activity relating to micro-organisms and cells (22). The six areas present across-section of the types of patents issued in thisfield.

Mutation/Genetic Engineering

Patents in this emerging area within biotech-nology refer to laboratory processes for producing astable, inheritable change in the genotype of ananimal, a plant, or a micro-organism. This can beaccomplished by artificially inducing a structuralchange in a gene or through the incorporation ofgenetic material from an outside source (e.g., a


chemically synthesized or modified gene). Patents inthis area include methods of modifying plasmids bychemical or biochemical processes.

Probably the best known patent in this area isPatent 4,237,224, covering the process for produc-ing biologically functioning molecular chimeras.Soon after the Chakrabarty decision, Stanley N.Cohen and Herbert Boyer (at Stanford Universityand the University of California at San Francisco,respectively) patented a process for inserting foreigngenetic material into a bacterial plasmid, a techniquewidely used in recombinant DNA research. TheCohen-Boyer patent was assigned to their universi-ties, who split royalty payment income receivedfrom those wishing to use the patented process. By1987, the Cohen-Boyer patent was Stanford’s topearning patent ($1.7 million annually), surpassingthe former leader, a 1971 patent on the FM synthe-sizer chip used in music synthesizers (2),

Enzymes Per Se

An enzyme is a protein that acts as a catalyst,speeding the rate at which a biochemical reactionproceeds, but not altering its direction or nature. Animportant tool in biotechnology, patents in this areahave included products (enzymes per se and enzymecompositions) and processes for preparing, separat-ing, purifying, and treating enzymes.

Immobilized Enzymes

Immobilization of an enzyme occurs when theenzyme or microbe is bonded to a carrier orentrapped within a carrier. The carrier materialphysically confines the enzyme or microbe, makingthem more stable when exposed to changes inreaction conditions. Binding often makes the en-zyme insoluble, offering additional economic ad-vantages. Examples of such bonded or entrappedenzymes include enzymes chemically or physicallybonded to a water-soluble matrix, enzymes con-tained within a polymer or gel, and enzymesabsorbed in resin.

Tissue and Cell Culture

Tissue and cell culture refers to the propagation ofcells removed from organisms in a laboratoryenvironment that has strict sterility, temperature,

and nutrient requirements. Techniques in this areaare of extreme importance to the medical sciencesfor the production of vaccines, pharmaceuticals, andantibodies. Patents in the area include those cover-ing processes, apparatus and nutrient media thatpermit the growth and maintenance of cell lines, aswell as cell lines per se.

Starch Hydrolysates

Hydrolysis is a chemical process of decomposi-tion involving splitting of a chemical bond andaddition of the elements of water. Patents in this areainclude those covering processes for synthesizingmonosaccharides by the action of an enzyme ormicro-organism. An example of such a process is thehydrolysis of starch to sugar.

Amino Acids

Amino acids are the building blocks of proteins.Each different protein is made up of a specificsequence of amino acids—which number some 20molecules—with the unique sequence coded for byDNA. Patents in the area include processes forpreparing alpha or beta amino acids and salts by abiological transformation of matter.

Emerging Patent Litigation

Early patents in the biotechnology field haveresulted in the emergence of patent litigation.Factors leading to litigation include the presence ofpioneer inventions, high value-added products, majorinvestments, and personality factors. Where litiga-tion is avoided, mitigating factors can includeeconomic considerations and the ability of parties toenter into licensing or cross-licensing arrangements(1 1). Courts are being asked to determine whetherpatent holders have met the requisite requirementsof novelty, usefulness, and nonobviousness. Inaddition, issues relating to the scope of claims,infringement, and enforcement of patents haveoccurred.

Uncertainty over patent protection is likely to becostly and will undoubtedly influence the researchand development strategy of many companies.Eighty-five percent of large companies respondingto an OTA survey indicated that they expect topursue trade secret protection for biotechnology

Chapter 4-Patenting of Micro-Organisms and Cells ● 57

The patent awarded to Stanley Cohen and Herbert Boyer in 1980. This patent has since become StanfordUniversity’s top earning patent ($1.7 million annually).

[11] 4,237,224Cohen et al. [45] Dec. 2, 1980

[54] PROCESS FOR PRODUCINGBIOLOGICALLY FUNCTIONALMOLECULAR CHIMERAS

[75] Inventors:

[73] Assignee:

[21] Appl. No.:

[22] Filed:

Stanley N. Cohen, Portola Valley;Herbert W. Boyer, Mill Valley, bothof Calif.

Board of Trustees of the LelandStanford Jr. University, Stanford,Calif.

1,021

Jan. 4, 1979

Related U.S. Application Data

[63] Continuation-in-part of Ser. No. 959,288, Nov. 9, 1978,which is a continuation-in-part of Ser. No. 687,430,May 17, 1976, abandoned, which is a continuation-inpart of Ser. No. 520,691, Nov. 4, 1974.

[51] Int. cl.~ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . C12P 21/W[52] U.S. Cl . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 435/68; 435/172;

435/231; 435/183; 435/317; 435/849; 435/820;435/91; 435/207; 260/1 12.5 S; 260/27R; 435/212

[58] Field of Search . . . . . . . . . . . . . . 195/1, 28 N, 28 R, 112,195/78, 79; 435/68, 172, 231, 183

[56] References Cited

U.S. PATENT DOCUMENTS

3,813,316 5/1974 Chakrabarty . . . . . . . . . . . . . . . . . . . . . . 195/28 R

OTHER PUBLICATIONSMorrow et al., Proc. Nat. Acad. Sci. USA, vol. 69, pp.3365-3369, NOV. 1972.Morrow et al., Proc. Nat. Acad. Sci. USA, vol. 71, pp.1743-1747, May 1974.Hershfield et al., Proc. Nat. Acad. Sci. USA, vol. 71,pp. 3455 et seq. (1974).Jackson et al., Proc. Nat. Acad. Sci. USA, vol. 69, pp.2904-2909, Oct. 1972.

Mertz et al., Proc. Nat. Acad. Sci. USA, vol. 69, pp.3370-3374, Nov. 1972.Cohen, et al., Proc. Nat. Acad. Sci. USA, vol. 70, pp.1293-1297, May 1973.Cohen et al., Proc. Nat. Acad. Sci. USA, vol. 70, pp.3240-3244, Nov. 1973.Chang et al., Proc. Nat. Acad. Sci, USA, vol. 71, pp.1030-1034, Apr. 1974.Ullrich et al., Science vol. 196, pp. 1313-1319, Jun.1977.Singer et al., Science vol. 181, p. 1114 (1973).Itakura et al., Science vol. 198, pp. 1056-1063 Dec.1977.Komaroff et al., Proc. Nat. Acad. Sci. USA, vol. 75, pp.3727-3731, Aug. 1978.Chemical and Engineering News, p. 4, May 30, 1977.Chemical and Engineering News, p. 6, Sep. 11, 1978.

Primary Examiner—Alvin E. TanenholtzAttorney, Agent, or Firm--Bertram 1. Rowland

[57] ABSTRACT

Method and compositions are provided for replicationand expression of exogenous genes in microorganisms.Plasmids or virus DNA are cleaved to provide linearDNA having ligatable termini to which is inserted agene having complementary termini, to provide a bio-logically functional replicon with a desired phenotypi-cal property. The replicon is inserted into a microor-ganism cell by transformation. Isolation of the transfor-mants provides cells for replication and expression ofthe DNA molecules present in the modified plasmid.The method provides a convenient and efficient way tointroduce genetic capability into microorganisms forthe production of nucleic acids and proteins, such asmedically or commercially useful enzymes, which mayhave direct usefulness, or may find expression in theproduction of drugs, such as hormones, antibiotics, orthe like, fixation of nitrogen, fermentation, utilization ofspecific feedstocks, or the like.

14 Claims, No Drawings

SOURCE: Office of Technology Licensing, Stanford University


Photo credit: Robyn Nishimi

Human cells in culture

lines in addition to patent protection, although patentprotection is more desirable for many companies(21). When intellectual property rights are unclear,valuable resources are invested in expensive andtime-consuming litigation.

Infringement

The patenting of micro-organisms and cells andrelated processes have, in several early cases,involved issues resulting from questions of patentinfringement. Patent infringement issues arisemainly in three contexts: literal infringement, in-fringement through the doctrine of equivalents, ornoninfringement through exceptions from infringe-ment.

Literal infringement occurs whenever a personwithout authority makes, uses, or sells any productor process that is covered by the patent claims withinthe United States during the term of the patent (35U.S.C. 271(a)). This is the most common form ofinfringement litigation. In addition to literal, orstatutory infringement, the Supreme Court hasestablished the rule that in order to prevent aninfringer from stealing the benefit of a patentedinvention, a patentee may proceed against theproducer of a product or process if it performssubstantially the same function in substantially thesame way to obtain the same result (7). This is therule of the doctrine of equivalents. The rule appliesin instances where the accused product or process inquestion does not constitute literal infringement, yetremains an “equivalent” of the patented invention.

In one case, a court found that certain “antibodyfragments” do the same thing in essentially the sameway as previously patented whole antibodies and,therefore, infringe the patent *’either literally or bythe doctrine of equivalents” (8). From this case itseems possible that the doctrine of equivalents isapplicable to other areas of biotechnology as well.

In biotechnology, the most relevant exemptionfrom patent infringement is the experimental useexception, a court-created doctrine which holds thatan experiment with a patented invention for the solepurpose of gratifying true scientific inquiry orphilosophical curiosity does not attack the right of apatentee, and thus does not constitute infringement.

In 1984, the Court of Appeals for the FederalCircuit decided that “the limited use of a patenteddrug for testing and investigation strictly related toFood and Drug Administration (FDA) drug approvalrequirements during the . . . term of the patent” didnot fall within the experimental use exemption, andthus constituted infringement (15). Roche, the plain-tiff, held a patent on the brand name prescriptionsleeping drug “Dalmane.” Bolar, a generic drugmanufacturer, began taking steps near the end of theterm of Roche’s patent. to gain FDA approval of ageneric drug equivalent. Bolar’s actions (bioequivalencytests) were conducted pursuant to the requirementsof the Federal Food, Drug, and Cosmetic Act(FDCA) (21 U.S.C. 301-392), which govern actionsrequired for FDA drug approval.

Chapter 4-Patenting of Micro-Organisms and Ceils ● 59

Roche argued that Bolar’s use of the patenteddrug constituted infringement. Bolar argued thatFDCA requirements created a conflict with thepatent infringement statute; because FDCA in-creased the time necessary for FDA drug approval,and because the patent code did not allow forFDA-mandated testing until the end of the patentterm, the patentees “gain for themselves . . . a defacto monopoly of upwards of two years” bypreventing the testing of a generic drug until thepatent expires. Although admitting that it usedDalmane, Bolar claimed that the use was “experi-mental.” The court found that Bolar’s use did not fallwithin the narrow confines of the experimental usedoctrine, and thus infringed Roche’s patent.

In the wake of Roche, Congress amended thepatent code (Public Law 98-417) to allow a statutoryexemption with respect to human drug productswhich in part overruled the court decision. Thus, itis “not. . . an act of infringement to make, use, orsell a patented invention . . . solely for uses reason-ably related to the development and submission ofinformation under a Federal law which regulated themanufacture, use, or sale of drugs” (35 U.S.C. 271(e)(l)).

Where the testing of a patented drug is found tobe not solely for purposes of meeting FDAapproval requirements, however, the testing willstill be found to constitute infringement. A 1987case tested the limits of this provision. In ScrippsClinic and Research Foundation v. Genentech (16),the plaintiff, owner of a patent for blood-clottingfactor VIII:C, brought an infringement suit againstGenentech, which defended by arguing that all itsuses of the factor VIII:C, though not solely forpurposes related to FDA testing, bore some reason-able relationship to such purposes and hence fit thenew 271 (e) exception. The court disagreed withGenentech, finding that actions taken by the com-pany (e.g., preparation of a European patent and thedevelopment of an agreement to commerciallymarket Factor VIII:C) constituted more than waspermitted by statute, which creates an exceptionsolely for the development and submission ofinformation required by a Federal law.

271 (c)(l ). A strict interpretation of the statute couldresult in slower development of generic copies ofpreviously patented organisms. A looser interpreta-tion could result in infringers taking advantage, earlyin a patent’s term, of the amendment in circum-stances where it was not intended to operate (10).

Scope of Protection

A significant issue presented by several casesinvolves the scope of protection for naturally occur-ring proteins as opposed to those that have beengenetically engineered. Although a protein found innature is not patentable, purified compositions of theprotein may be patented.

An example of this involves current developmentof tissue plasminogen activator (tPA), a geneticallyengineered protein drug that helps to dissolve bloodclots in patients who have suffered heart attacks.Genentech, Inc. received FDA approval in 1987 tomarket its form of tPA. During the first 5 monthsfollowing government approval, sales totaled $100million (1). Subsequently, Genentech received exclu-sive license to a patent claiming broad protection forthe way tPA acts on blood clots (U.S. 4,752,603) (6).Nonetheless, other companies also filed patentapplications for their forms of tPA, based on smallchanges in the molecular structure of the drug.

The scope of protection (i.e., whether patentprotection will be on the fundamental characteristicsand uses of an organism or product, or on the slight

It remains unclear how other courts will interpretexemption from infringement issues raised by theapplication of various fact patterns to Section

60 . New Developments in Biotechnology: Patenting L@

modifications of the organism or product) is an issuethat will determine the degree of exclusivity thatpatent holders will enjoy. The Patent Office and thecourts have a long history of experience in dealingwith questions of claim scope (17), but compara-tively little experience in applying this law tobiotechnology inventions. Until court decisionsresolve emerging issues, neither a patentee nor thepatentee’s competitors can be entirely clear on thelimits of patent claim enforcement (5).

Already, patent battles are being fought overInterleukin-2, tissue plasminogen activator, humangrowth hormone, hybridoma technology, alpha in-terferon, factor VIII, and use of dual monoclinalantibody sandwich immunoassay in diagnostic testkits. Companies receiving basic product patents arein court enforcing their rights against infringementor defending the patent grant in opposition orrevocation proceedings. It is likely that patentlitigation in biotechnology will increase given thecomplex web of partially overlapping patent claims,the high-value products, the problem of prior publi-cation, and the fact that many companies are chasingthe same products (21).

U.S. Patent and Trademark Office Activity

The majority of biotechnology patent applicationsinvolving micro-organisms and cells fit into one oftwo classes established by PTO for examinationpurposes. Class 935 is a comprehensive cross--reference collection of patents and other technicaldocuments relating to genetic engineering technol-ogy. Within the Class 935 are various subclasses(see table 4-l). Micro-organisms per se that are notprovided for in other classes are listed in Class 435,Chemistry: Molecular Biology and Microbiology(see table 4-2).

Patent activity in both areas has increased dra-matically during the past 10 years, both as a functionof application filing date (that date when theapplication is filed) and patent grant date (the date ofthose patents which issued) (see figures 4-3 and 4-4).In both classes, the majority of patentees areAmericans, and the vast majority of patents areowned by U.S. corporations (see table 4-3).

A recent survey of genetic engineering patentsconfirms the dominance of U.S. inventors in the areaof biotechnology patents as related to pharmaceuti-

cals and health care (14). The PharmaceuticalManufacturers Association found that of 1,476biotechnology patents issued by PTO in 1987, some206 used techniques of the “new biotechnology.”Fully 80 percent of these patents (159) were of U.S.origin, as opposed to only 20 percent (40) fromforeign sources. Within the United States, corpora-tions accounted for 45 percent of the patents (89),nearly 21/2 times as many patents as U.S. uni-versities.

One negative trend from the increase of patentapplications is the inability of PTO to processbiotechnology applications in a timely manner. Thenumber of biotechnology patent applications hasseverely challenged the process and examinationcapabilities of PTO. In March 1988, PTO reorga-nized its biotechnology effort into a separate patentexamining group. As of July 1988, 5,850 biotech-nology applications had not yet been acted on.Currently, it is approximately 15.5 months, onaverage, before examination of a biotechnologyapplication is initiated, and an average of 27months before the examination process is com-pleted by grant of the patentor abandonment ofthe patent application (24). Turnover among patentexaminers, lured to the private sector by higher pay,is cited as a significant reason for the delay inreviewing patents (21 ).

SUMMARYPrior to 1980, the U.S. Patent and Trademark

Office did not grant patents on living organisms perse, deeming such organisms to be outside the scopeof statutory subject matter. This policy was reversedby the Supreme Court’s landmark decision inDiamond v. Chakrabarty in 1980, a case involvinga genetically engineered bacterium capable of break-ing down multiple components of crude oil. TheChakrabarty decision, in concert with revisions toFederal patent policy, led to increased numbers ofpatent applications for living micro-organisms andcells, as well as related processes. The majority ofsuch patents are filed by U.S. inventors and ownedby U.S. corporations. Patent activity is one measureof the increased commercialization of biotech-nology during the 1980s. One predictable and costlyresult has been the emergence of patent infringementlitigation, as patent holders and alleged infringersattempt to define the scope of biotechnology patent


Table 4-l--Class 935, Genetic Engineering

1

23456789

10

111213

141516

17181920212223

2425262728


Table 4-2-Class 435, Chemistry:Molecular Biology and Microbiology

This class provides for the following subjectmatter when not provided for elsewhere:

A process of using a micro-organism or enzyme to synthesizea chemical product.A process of treating a material with a micro-organism orenzyme to separate, liberate, or purify a preexisting sub-stance.An in vitro process of measuring and testing in which:(1) A micro-organism or enzyme is used to determine the

presence or identity of a compound or composition in asample.

(2) A micro-organism is identified by propagation.(3) An enzyme is identified by its catalytic activity.(4) The presence of micro-organisms is detected.(5) A live micro-organism is used in an antigen antibody test

as an antigen.A process of propagating a micro-organism.A process in which the genetic structure of a micro-organismor extrachromosomal genetic structure is altered.A process of organ or tissue maintenance.A process of mashing or malting.Apparatus claimed or solely disclosed as for A-G.Micro-organisms per se or the subcellular parts thereof.Enzymes, immobilized enzymes or enzyme containing com-positions not otherwise provided for and the processes forpurifying enzymes or forming immobilized enzymes.Compositions claimed or solely disclosed as for the propa-gation of micro-organisms or for measuring and testingprocesses in C above.

SOURCE: U.S. Patent and Trademark Office, 1988

Table 4-3-Patents: Applications and Ownership,by Class

Class935 435

Percent of applications, US inventor . . . . . . . . . . 77 59Percent of applications, foreign inventor . . . . . . . 23 41Percent of patents, corporate owned . . . . . . . . . . 91 88Percent of patents, government owned . . . . . . . . 4 4

SOURCE: U.S. Patent and Trademark Office, 1988.

protection. It is unclear at this time what the result ofsuch litigation will be. One negative result ofincreased numbers of biotechnology patent applica-tions is PTO’s inability to examine such applicationsin a timely manner.

CHAPTER 4 REFERENCES1.

2.

Andrews, E. L., “The Complex bgai Issues in TPAFight,” New York Times, July 2, 1988.Barinaga, M, “Stanford Still on Top,” Nature 332(6161):192, Mar. 17, 1988.

3,

4.5.

6.

7.

8.

9.10.

1 i.

12,

13.

14.

15.

16.

17.

18.

19.

20.

Chukrabarty v. Diamond, 571 F.2d 40 (C. C.P.A.1978).Diamond v. Chakrabarty, 477 U.S. 303 (1980).Duffey, W,, “The Marvelous Gifts of Biotech: WillThey Be Nourished or Stifled by Our InternationalPatent Laws?” Symposium on the Protection ofBiotechnologicai Inventions, World Intellectual Prop-erty Organization and Cornell University, Ithaca,NY, June 1987.Ezzell, C., “Genentech Gets Patent Protection forTissue Plmminogen Activator,’’ Nature,333(6176) :79O,1988.Graver Tank & Manufacturing Co., Inc. v. Linde AirProducts Co., 339 U.S. 605 (1949).Hvbritech v. Monoclinal Antibodies, Inc., 802 F.2d1367 (Fed. Cir. 1986)./n re Bergy, 563 F.2d 1031, 195 USPQ 344 (1977).Janicke, P. M., attorney, Arnold, Durkee & White,Houston, TX, personal communication, Aug. 24,1988.Kamy, G., attorney, Dickstein, Shapiro & Morin,Vienna, VA, personal communication, Aug. 26,1988.Memorandum dated Feb. 18, 1983, from the Presi-dent to the Heads of the Executive Departments andAgencies on Government Patent Policy, 19 WeeklyComp. Pres. Dec. 252.Nelicin, D., Science as Intellectual Property (NewYork, NY; Macmillan, 1984).Pharmaceutical Manufacturers Association, “up-date: Biotechnology Products in Development,*’ Juiy1988.Roche Products Inc. v. Bolar Pharmaceutical Co.,733 F.2d 858 (Fed. Cir. 1984).Scripps Clinic and Research Foundation v. Genen-tech, 666 F.Supp 1379 (N.D. Cai. 1987).Sibley, K. D., “Factuai Inquiries in Deciding theQuestion of Enablement,” 70 J. Pat. Off. Soc. 115(1988).Tanenholtz, Alvin E., “Genetic Engineering—Technological Trends From the Perspective of a U.S.PTO Examiner,” Fourth Annual Biotechnology LawInstitute (Clifton, NJ: Prentice Hall Law & Business,1988).U.S. Congress, Office of Technology Assessment,Commercial Biotechnology: An International Analy-sis, OTA-BA-218 (Elmsford, NY: Pergamon Press,January 1984).U.S. Congress, Office of Technology Assessment,New Developments in Biotechnology: Ownership ofHuman Tissue sandCells-Specia lReport, OTA-BA-337 (Washington, DC: U.S. Government PrintingOffice, March 1987).


Figure 4-3-Patent Activity Class 935, Genetic Engineering

P a t e n t s200

150

100

5 0

.u

200

150

100

50

0

By patent grant date 1978-87

/

w——

I I

P a t e n t s

I

SOURCE. U S Patant and Trademark Othce, 1989.

64 . New Developments in Biotechnology: Patenting Life

Figure 4-4-Patent

Patents

Activity Class 435, Chemistry: Molecular Biologyand Microbiology

1,080

8 1 0

5 4 0

2 7 0

0

1,080

8 1 0

5 4 0

2 7 0

0

1978 1979 1980 1981 1982 1983 1984 1985 1986 1987

Patents

By application f i l ing date 1975-84

9 8 3 1984

SOURCE: U.S Patent and Trademark (Mice. 1989.

Chapter 4-Patenting of Micro-Organisms and Cells 65

21. U.S. Congress, Office of Technology Assessment, 23. United States v. Dublilier Condenser C’orp., 289 U.S.New Development.~ in Biotechnology: U.S. lnvestment-- 178 (1933).Special Report, OTA-BA-360 (Springfield, VA:National Technical Information Service, July 1988). 24. %n Horn, C., Deputy Solicitor, U.S. Patent and

22. U.S. Dep~rnent of Commerce, Patent and Trade- Trademark Office, Washington, DC, personal com-mark Office, OffIce of Technology Assessment and munication, September 1988.Forecast, Patent Prqfiles-biotechnology: 1982 Up-date (Washington, DC, September 1983).

chapter 4 patenting of micro-organisms and cells

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